11 Simple Ways To Pay Off Holiday Debt If You're Already Broke

Americans went big when it came time to purchase gifts during the 2024 holiday season. According to Mastercard Spending Pulse, a company that tracks payments made using both credit cards and cash, sales were up 3.8%, a figure that translates into billions of dollars in spending. But it doesn’t sound like many shoppers had a plan to pay for all those new new items, with LendingTree saying that 36% of Americans borrowed money to pay for those purchases.

If you’re one of many who unintentionally stretched your budget to the max (and beyond) this holiday season, consider these 11 clever ways to pay off debt so that you can get your finances back on track in 2025.

If you overspent using your credit cards this holiday season, it’s important to take stock of which bills are more urgent.

Look at your credit card statements to determine which cards have the highest interest rates, since it’s wise to pay these down first to avoid creating more debt.

After the holidays, you may only be able to pay the minimum on your credit cards — but as you get your budget back on track, consider paying more than the minimum whenever possible to avoid paying more in interest over time.

Many people these days are embracing side hustles, which allow them to work as much or as little as they want. Sometimes side hustles even allow you to make money off hobbies and interests.

Side hustles can be anything from driving for a rideshare app to picking up freelance work in creative fields like writing and graphic design.

One of the first steps to take after an overspending spree is a spending freeze — essentially, you want to cut down on all purchases that are not absolutely essential. That means cutting out things like ordering take out and nights out on the town until your budget is back on track.

Your previous budget may need to be revamped as you recover from holiday spending, but exactly how much depends on how much you owe. This will help you determine if you’ll just need to cut back on dining expenses for a few weeks; or if your budget needs a months-long overhaul.

It’s important to be realistic about just how much you owe and how quickly you can pay it.

Don’t make unreasonably tight restrictions when it comes to setting up your post-holiday budget, since you’ll be less likely to stick to it.

For example, you may need to cut your dining out budget in half for the next few months. But, if your favorite local restaurant has a happy hour deal where you can get your go-to meal for half the price — and it won’t break the budget — you can still enjoy small splurges while getting back on track.

Take stock of what debts need to be paid down first — this may be your credit card with the highest interest rate or your biggest balance. If all your debt is on one credit card, closely examine your budget to see what expenses can be skipped or reduced until debt is paid.

A budget can be planned out months in advance and if you’re hoping to pay off serious debts. This may mean cash that is normally “fun money” has to be devoted to paying bills for the next few months — or it may be as simple as putting $20 per paycheck towards the balance.

You may be surprised at how much money is flying out of your account every month for subscriptions services. If your budget has been seriously overblown, it may be time to cut streaming services (or at least some of them) for a few months, cancel the gym membership, and get rid of any food or shopping subscriptions.

A raise is certainly a top way to crush your debt. Since many companies do reviews at either the end or beginning of the year, making it a great time to brush up on your negotiating skills and make your case for a salary increase.

Some companies also do year-end bonuses which can go a long way towards eliminating holiday debt.

If your credit card situation is bleak, getting a balance transfer credit card is another way to save money on interest. Some credit cards even offer promotional periods where they charge very low or even 0% interest on transferred debt for a certain time period.

If you’re sure you can pay the balance within this period, it could mean major savings.

Whether you do it by beginning a side hustle to supplement your income or consolidating debts, it’s important to address holiday shopping debt as soon as possible so that you can try to avoid letting it become a problem that follows you too far into the new year.

Step one is to be realistic about how much you owe and what needs to be paid down first, and step two is to remember not to beat yourself up too much about the things you can’t change, and instead focus on ensuring you don’t make these same choices the next time the holiday season rolls around.